Get More For Your Business

You have worked extremely hard for many years building your business into what it is now.  Through the ups and downs, you have managed to keep your business viable and successful.  It has been a good ride, but the time has come, and it is now time for your business to work for you – you are ready to sell your business.

How do you get the most out of what will probably be the most important transaction of your life?

You devise the right plan, lay the groundwork and drive the process. 

Following these three simple steps will allow you to get the most out of your business.  If you don’t, you can leave money on the table, drag out the process, and risk the ongoing operation of your business.

The Right Plan

The key to developing the right plan is to have the right people advising you.  As you grew your business, your close advisors were there to help you along the way.  Your lawyer, your accountant and your banker were all key parts of your team that helped guide your success.  When it comes to selling your business, you will want to add a professional M&A Advisory and Business Brokerage firm to your team to help you through this last stage.  You may be tempted to try it alone, but the truth is you don’t know what you don’t know and the last thing you want is to do proceed in a manner that will undermine the entire process.  For the same reasons that you have your accountant prepare your tax forms and you lawyer represent you in court, make sure you choose a qualified, experienced M&A firm to work with you to devise a plan that is right for your specific needs.  A professional M&A firm will sit down with you to learn about your business, listen to your goals and will work with you to review your options to come up with your best plan for achieving those goals.

The Groundwork

Any building will crumble without a solid foundation.  The same can be said for any M&A deal.  It is critical to establish a credible basis from which a deal can be built upon.   That foundation is a proper valuation from an independent, certified valuation company.  This valuation will give you and your M&A advisors the tools to orchestrate a successful deal on your behalf.  It will establish the correct benchmark of the true value of your company.  Not the value you think it should be, not the value that your brother thinks it should be and not even the value that your accountant suggests.  An independent proper valuation is a report that will be regarded as a respectable, unbiased assessment by potential buyers and SBA lenders alike.  It will also set your expectations at the proper level as you begin to develop your marketing plans so you can make informed decisions as you move through the selling process.

As difficult as it may be to hear, you are significantly better off knowing your company’s true worth at the beginning of the process even if it’s far less than what you originally thought.  Once you have this accurate Fair Market Value (FMV), there are actions that your M&A Advisors may be able to take to help you to increase the value of your company.  On the other hand, if your company is worth more than you expected, you would leave money on the table by setting an initial asking price that is too low.  Either way, obtaining a proper valuation sets the stage for a successful transaction which will maximize the return on the sale of your company.

Driving the Process

Now that you have successfully and accurately defined the worth of your company and developed a plan with your M&A advisor and business broker, it is time to go to market.  What is the proper way to “go to market” and how can you effectively market your company while maintaining confidentiality?

• It would very negatively impact your business, if your customers, vendors, competitors and employees learned of your plans before you were ready to reveal the news to them. Confidentiality and professionalism are critical to the marketing process and your M&A Advisor will manage that balance for you.  They should be experienced in marketing your company in a broad enough way yet keep your identity anonymous, as well as being able to target all potentially interested parties.
• Your M&A Advisors should also have access to a large network of potential buyers. The greater initial exposure to investors increases the opportunity for multiple interested parties.  This can lead to a possible bidding war maximizing your return, and at the very least, provide additional negotiation leverage to you.
• Your M&A Advisors should thoroughly prequalify potential buyers to ensure financial and managerial prerequisites are met. The last thing you want is to spend months negotiating with a potential buyer who doesn’t have the financial wherewithal to fund the transaction or support the operation of the company thereafter.
• Lastly, your advisor will be looking out for your best interests. Your M&A Advisor will have a fiduciary responsibility to you and will make sure all is being done to maximize your financial return.  This will not be the case if a (buy-side) broker approaches you for a buyer that they are representing.   That broker will be looking out for their client’s best interests, not yours.  You want you and your team driving the process, not the other way around.

These are just a few of the many topics to consider when looking to sell your business.  As every business is unique, every M&A deal is different, and having the proper guidance to lead you through the inevitable minefield that you will encounter during this process will make all of the difference and will allow you to get the most for your business.